President’s Address

David Delicata

Dear readers, welcome to another edition of The Accountant. I do hope that Summer provided you with an opportunity to wind down, regenerate yourselves and spend quality time with your loved ones as we prepare for the final push of this calendar year.

Almost thirty months have passed since our lives came to a halt as we faced the full force of the pandemic. The economic and social impact was unprecedented. Yet, our nation tirelessly and collectively stood up, faced the challenges and is thankfully on the path to renewed growth.

Almost fifteen months ago, the Financial Action Task Force placed Malta in its grey-listing mechanism. An unwelcome situation, if anything. Yet, here again, stakeholders from the industry and beyond got together, identified the key areas to address, debated and provided solutions, and ensured a quick removal for the country from this unwanted predicament.

The reason that I put forward these two recent adverse experiences is precisely to tie it up with a note of encouragement. They are a stark reminder of the ability of our country, of our people, of our professionals, to face adversity, address it head-on and rise stronger than before. This ability is being called upon us once again as the repercussions of war in Europe reverberate across the continent. The rapid increase in inflation is creating headaches to governments, central banks, businesses and individuals across the globe. Not a day goes by without the issue being highlighted by reputable financial journals, traditional and online media and social commenting platforms. With the forecasts showing the possibility of close to double digit inflation in Europe, in parallel with the possibility of a recession, there is growing concern that we are approaching a period of stagflation, where prolonged weak growth accompanies persistently high inflation.

Record levels of inflation, coupled with supply side concerns and the ongoing limitations in the human resource sector, are evidently taking their toll on businesses. In an economy which is still reeling from the effects of a two-year pandemic, companies’ balance sheets are being dented. In spite of this, opportunities are abound too.

Once again, this calls into action the accountancy professional, offering experience and insight into a company’s reporting. While some will find their voices drowned in the cacophony of developing events, others will find themselves significantly relied upon for counsel and bearing more responsibility in companies’ efforts towards profitability.

Inflation is likely to headline our agenda for months to come. Yet this big challenge should not derail the country’s post-grey-listing efforts to enhance its competitiveness, a top priority which the Institute has long been calling for. We continue to advocate the identification of new pathways towards the markets of tomorrow, which entail not only the determination of which economic niches the country wants to attract, but more importantly the strategy to get there.

This includes the necessary technological and socio-institutional innovation, investment in education and training, and implementation of specific initiatives which make such a proposition attractive to investors. This comprises reducing bureaucracy, making sure that new legislation does not add additional burdens and a speedier legal system.

Beyond that, we must also look at the basic things which lead to a better quality of life. It is truly worrying for me to read surveys that indicate that a large cohort of young people – possibly highly skilled and educated – have indicated its desire to leave the country for good. It is useless aiming to be a top-level jurisdiction if our own children are not comfortable earning their living here.

Such a brain drain could leave a long-lasting damage to our economy besides exacerbating the already complex issue related to the unavailability of resources.

As an Institute, we are making our voices heard in the right places to get these messages across. The experience in the twelve months preceding Malta’s de-listing from the FATF enhanced monitoring procedure, secured the strengthening of the role and respect enjoyed by the MIA in a national context. Our valid contributions, proposals and feedback were appreciated by authorities and other stakeholders, so much so that today, we are increasingly sought out for our feedback on a number of matters of national importance.

This however places on us additional responsibility and demands as the representatives of the profession. At the same time, it highlights the relevance of MIA membership. A few weeks ago, Government announced its intention to commence its preparations towards streamlining due diligence processes which are currently carried out independently by a number of different regulators. This is something that our members have long called for and the Institute thus pushed strongly with authorities. It is a tangible example of how MIA membership truly makes a difference. We will keep coming up with solutions in the context of these discussions which are expected to continue over the next months.

Another issue which will certainly be of interest to our membership base is related to the international developments surrounding a minimum corporate taxation rate. A local reform in this regard, if any, is expected to significantly impact the financial services sector, which has continued to grow despite the setbacks in the wider economy during the previous years, so much so that a study requested by the MIA and other professional bodies shows that this sectors’ employment represents 10% of the total workforce in the Maltese economy. A summary of this analysis is presented in this edition of The Accountant.

As always, these are just a few of the issues on our agenda. I look forward to engage with you in the months ahead in our continued efforts to listen to your feedback, act on it and in the process, strengthen our profession further.